As an initiative to bridge the divide between social care and health, it is regarded as a pacesetter for other local partnerships and a model for the country. By merging, in effect, social and primary care in Blackburn under a new eight-strong board of officials and councillors, the new partners promise a better use of resources "to reduce bureaucracy and duplication" and improve customer satisfaction.

The board will have a joint annual budget of £100m to help vulnerable children, and older and disabled people, while overseeing a raft of other public health issues from drug abuse to teenage pregnancy. A new, £11m health centre is planned as the public face of the partnership and it is hoped that there, eventually, the social care of the local authority and the healthcare of the NHS will be indistinguishable.

For Sir Bill Taylor, leader of Blackburn with Darwen council, the social services/primary care trust (PCT) board is a way of extending the council's influence into other areas of service delivery and widening the democratic umbrella of the town hall. Every month he opens up his office to the people. He calls it the leader's surgery. "They can talk to me about anything - areas where the council once had responsibility but doesn't any longer," he says. "And it soon becomes quite clear that citizens don't care who provides a public service as long as it is delivered efficiently and addresses their needs."

In areas from health to transport, crime prevention and the whole realm of education and skills, some of Taylor's visitors still assume the council has ultimate responsibility - whereas, since 1945, it has progressively lost control to quangos and government agencies, while Whitehall has tightened its grip over town hall finances and functions.

Yet, after the last general election, it seemed the tide was turning. Senior ministers acknowledged privately that it was time for Whitehall to let go because the centre could deliver neither efficiently nor equitably. Encouraged by this new mood, Blackburn began forging partnerships across the community in an attempt to extend its umbrella over services such as health.

But Taylor, who is also agent for Blackburn MP Jack Straw, the foreign secretary, cautions that partnership requires both a touch of humility and a new approach from councillors who jealously guard their services. "We have to let go of things, and it is hard for some," he admits.

More than two years ago, a local government white paper promised a carrot of more "freedoms and flexibilities" in return for the stick of a new audit commission assessment of town hall performance. The Local Government Association (LGA), which represents all the big councils, responded by promising to work with the government to deliver shared objectives in education, social care, crime and disorder and the environment. But, as spring dawned this year, it became apparent that all was not well.

True, the LGA regularly met senior ministers at meetings of a central-local partnership, and the deputy prime minister, John Prescott, made soothing noises. But six months after that commission assessment, the LGA complains that few of the promised freedoms have materialised for the 22 authorities adjudged to be "excellent".

Council leaders do meet ministers in an "innovation forum" to explore new freedoms. But the LGA is not impressed. "We got a well-crafted stick from the government, and now we have a carrot withering in the ground," sighs one association insider.

One tool for the new approach was to be public service agreements (PSAs) between Whitehall and 93 of the big English authorities. The idea was that councils would be rewarded for meeting a set of pre-determined targets, but penalised if they fell behind. In one of the most far-reaching PSAs, Kent county council has been promised a multi-million-pound boost by the Treasury if it reduces welfare dependency over five years. "But the government has just failed to link up this agenda elsewhere," complains a senior LGA official. "It's desperately frustrating."

Sir Sandy Bruce-Lockhart, leader of Kent and vice-chairman of the LGA, is confused. While the county council has established a good relationship with work and pensions secretary Andrew Smith, he says, it has found the Department of Health a "nightmare" in trying to reach common ground on health and social work delivery. "We thought they meant what they said when they talked about more freedom," says Bruce-Lockhart. "But they're actually taking things away from councils. At the same time, you've got good local authorities offering to sign up and deliver government targets and take responsibility if they fail to deliver."

This frustration is underlined in an unusually critical paper from the LGA, Ambition Thwarted?, to be discussed by delegates at the association's annual conference, starting in Harrogate today. The paper complains that while a flotilla of ministers is now sailing under the colours of "localism", the government over the past six months has been looking both ways with a "Janus-faced approach". While ministers commit to decentralisation on the one hand, the paper says, on the other they issue centralist edicts, such as threatening to fine councils if they fail to free up acute hospital beds by providing sufficient community care.

This, warns the LGA, threatens to damage "crucial partnerships between councils and the health service," such as the pacesetting social services/PCT board in Blackburn.

For the LGA, the government mantra of "localism" seems to mean all things to all ministers: for a few, it is a way of strengthening councils; for the rest, it is a way of bypassing them.

Plans for directly elected boards for foundation hospitals - the former health secretary Alan Milburn even floated the idea of directly elected PCTs - appear to undermine the new partnerships. Home secretary David Blunkett's musings about elected police boards have brought more confusion in councils developing community safety strategies with police. Further thinking from other ministers about directly elected school boards, and encouraging grassroots democracy in specific neighbourhood projects, have served only to heighten tension. "Why propose... an alternative system of local accountability that will make joined-up government even more difficult to achieve?" asks the LGA paper.

Part of the problem lies away from Prescott's local government and regions department in the bigger Whitehall spending ministries, such as health, the Home Office and education and skills, which, at best, share that "Janus-faced" approach, and at worst, say insiders, treat local government as a regressive force rather than a partner.

In Blackburn, Taylor blames Whitehall's entrenched centralist culture, rather than individual ministers, for the confusion. "We've had a lot of ministers up here looking at what we're doing, but when they get back to their departments, something seems to hold them up," he says. "The cabinet should have a bit of a think on this. Tony Blair was very clearly saying that, while policies can be developed at Westminster, they have to be delivered locally."

Nevertheless, on the ground, Blackburn with Darwen is hoping to forge ahead with partnerships which, Taylor hopes, will push the "democratic dynamic" beyond social services and health into other aspects of council work. Transport, skills training, higher education, housing regeneration - in an area blighted in parts by abandoned terraces and low demand - could all be targets. But Taylor says the government first has to learn to let go and let local initiatives "blossom".

Town hall demands

Although ministers promised to scrap a raft of Whitehall controls over councils, and allow greater freedoms to the best performers, town hall leaders complain that little has really changed. Some councils would like new or increased powers such as:

· Authority to use income from speeding fines paid by local motorists to enhance road safety measures;

· Freedom to set speed limits, such as signs showing 10mph advisory speeds in special "home zones";

· Greater control over the right of utilities to dig up roads, and the times at which they do it;

· Power to set bigger fines for organised fly-tipping by companies;

· Rights to enter derelict private land, clean it up and charge the cost to the owner;

· Greater flexibility around the (centrally imposed) school curriculum.